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California Isn't Just for Tech Disruption — This Food and Beverage Distributor is Turning Heads, Too

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From spiked ice cream to nonstandard cuts of beef and seafood, Pacific Ventures Group (OTCMKTS: PACV) is looking to become a rising player in the food and beverage industry. With a leadership team that has a background in the industry, it has been repositioning itself through strategic acquisitions to compete with the likes of US Food Holdings Corp (NYSE: USFD) and Sysco (NYSE: SYY).

Making Their Moves

Starting in 2018, Pacific Ventures began to look for acquisition opportunities after completing a reverse merger with SnoBar, an adult desert line of alcohol-infused ice creams and ice pops, which remains one of its premier brands to this day. Eventually, Pacific Ventures found an opportunity in San Diego Farmers Outlet, a commercial restaurant supplier from Southern California.

This acquisition was followed by another in 2019 when Pacific Ventures bought a USDA meat processing and distribution plant, Seaport Meat Company, which supplies high-quality meats, seafood, dry goods and dairy products to a variety of customers spanning from retail to restaurants and even larger institutions.

Seaport Meat Company gave Pacific Ventures further diversification across not only new product lines but also market segments as well, presenting the opportunity to cross-sell customers. For example, adding produce sales to Seaport accounts alone added an extra $57,000 per day in new sales in early tests.

Post-Pandemic Growth

Cross-pollination across product lines and markets has given Pacific Ventures a strong position during the post-pandemic reopening. This translated into a 33% increase in revenue to $11.6 million, a 35% increase in gross profit and an increase in its gross margin to 11.7%. Clearly, Pacific Ventures is on the right track as its customers continue to reopen and increase their orders back to pre-pandemic levels.

Pacific Venture Group’s CEO Shannon Masjedi commented in a recent press release, “We witnessed an uptick in business during the quarter as more and more clients are coming back and increasing orders from previous levels, as Seaport takes market share from other suppliers.”

“We are thrilled with our second quarter 2021 results, as we reached our highest monthly revenues to date. Restaurants are back on their way toward 100% capacity. Petco Park and County Fairs are back and ramping their business and capacities. Over the past year and a half, we have expanded our sourcing, increased our production capacity, improved our efficiencies and vastly enhanced our positioning in order to better serve existing and new customers as we return to normalcy,” Masjedi added.

2021 has definitely been a year of positive change for Pacific Venture Group, and it seems that its acquisition strategy of buying businesses conducive for cross-selling has paid off. The company’s recent growth hasn’t caught up with its overall valuation, as evidenced by its 0.4 enterprise value/sales multiplier in a sector where most competitors have a 2.4 value/sales multiplier. Despite Pacific Ventures being a newer player in the food and beverage distribution space, they may be poised to become a premier competitor.

Photo by Peter Bond on Unsplash

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